Seedrs’ head of finance balances growth opportunities with future profitability
Karen Kerrigan doesn't have a typical day. Her role morphs between HR, legal and finance and, on a normal day, that could mean anything from lobbying the government, working with the sales team or raising capital for one of Britain’s alternative-finance exports.
Seedrs was at the avant-garde of equity crowdfunding in 2012, launching an online platform to allow the general public to take small stakes in businesses’ funding rounds. It’s a fast-growing opportunity and the business is running at a loss to ensure they can take advantage.
Kerrigan’s role at the head of the finance function means working hard to ensure this growth is achieved in a way that’s scalable and the finance team is actively involved in day-to-day operational conversations.
Technology is central to fulfilling this mission and Kerrigan needs to make sure the company is increasing its commission revenue and investment numbers faster than its headcount. As she puts it, they can’t simply add customer service personnel at the same rate as their customer base grows as a high street bank might have in the past. This means her key KPIs are contribution per employee and cost to serve.
“If we can increase our investment numbers and our commission numbers at a much higher rate than we are increasing our headcount numbers then we're doing a good job,” she told AccountingWEB in a recent interview.
The fact that the company hasn’t yet recorded a profit doesn't mean it’s not geared towards profitability either, stressed Kerrigan. This means she focuses on net loss over the quarter or year, and its plan to become profitable over the next couple of years.
“At the same time, you have to keep balancing that against other opportunities, such as geographic expansion or a particular area of growth” she said. “We've become a lot more grown-up since our Series A, but we still like to think of ourselves as pretty lean and opportunistic and not being tied to those numbers.”
Seedrs closed that £10m funding round in October last year, including £6m raised from the crowd (the average individual investment was £3,200 and the largest £800,000) and £4m from Woodford Investment Management, at a £50m post-money valuation.
Kerrigan’s job title is chief legal officer and she spends about 25% of her time on finance-related matters. She manages a team of 12-13 employees that includes four finance people, with a finance controller and a few associates within that group.
This is already a significant change from the handful of people that ran Seedrs when she joined the company in 2013 and they’re now actively considering making the head of finance a full-time role.
Kerrigan said the company’s mission hasn’t changed, but notes the scale of funding they’re looking at has. The business’s name, Seedrs, is a reference to the seed-stage companies it originally set out to support. They continue to work with businesses at the start of their journey, but are seeing bigger and bigger companies using crowdfunding.
“We've realised there is an appetite for equity crowdfunding that stretches far beyond seed-stage businesses. We're now funding businesses all the way up to IPO stage. We've had a couple of listed business raise alongside a traditional institutional capital raise, which has been fascinating. The vision is to progress towards an investment platform where private businesses go to for a range of services to grow their business,” said Kerrigan.
The change in the type of businesses raising on the platform is part of equity crowdfunding market maturing. The UK was at the forefront of launching and regulating the sector, and continues to have one of the most active markets in the world. It’s part of a wider alternative finance revolution that’s seen a series of challenger banks open and a multitude of other financial services launch online over the last decade.
“I don't think it's quite as obvious as everyone hates the banks and so looks for somewhere else to put their money, which is the common refrain,” said Kerrigan, ruminating on the impact of the financial crash. “I think it's about choice and transparency, and low interest rates. There are two things interconnecting; the financial crash and technology. I think that we sit right within that.”